How Can You Apply Personal Finance In Your Daily Life?

Personal finance is the process of managing your money. It talks about saving, budgeting, investing, banking, insurance, tax, mortgage, retirement, and a lot more.

Is personal finance useful?

Many would think personal finance only looks good on paper. That there are no practical ways of applying it in our daily lives. Nothing can be further from the truth.

The primary use of personal finance is to make you aware of your numbers. This allows you to adjust your lifestyle based on your financial limitations. By doing so, it enables you to be more mindful of spending and make better decisions overall. In addition, you can also use your data to detect leaks, build credibility, and set more tangible goals in life.

6 ways you can use personal finance in your everyday life

1. You can set more tangible goals

Managing your money allows you to create a more actionable plan. It gives you actual data on which to base your goals. Almost everybody wants to be rich. But if you ask them, “How much money do you need to become wealthy?” they often cannot answer. This usually happens to people who do not practice personal finance.

I found myself in huge debt in 2016 and wondered how I got there. As I lamented over my ordeal, I sat down with a pen and paper to take inventory of my finances for the first time. I folded the sheet in half and drew a plus sign on the left column where I listed all my income sources. On the right, is a minus sign for my expenses. Lo and behold, here is what I found:

Borrowed funds
Credit card debts
Mobile postpaid plan
Car fuel and maintenance
NBA League Pass

There were nine items on the minus side and only one on the plus side. I finally understood the problem and realized the steps I needed to do next. For a couple of years, I worked on cutting down on the minuses and adding more pluses. By 2018, here is what my journal looked like:

Real estate (Commission)Utilities
Transportation service (Commission)Wages
Index fundBorrowed funds (Negotiated)
Money market fundCredit card debts
Bond fundMobile postpaid plan (Changed to a lower plan)
Invested in a friend’s businessCar fuel and maintenance
Buy and sellCharity (As budget allows)
High-interest savingsNBA League Pass
Jewelry businessChild care

Today, I still continue to keep these two in check — always in the process of minimizing expenses and increasing the cash flow. Later, I learned these pluses and minuses are officially known as assets and liabilities.

We would all be like dogs who are chasing their own tails if we don’t apply personal finance in our daily lives. We work and work each day without really knowing whether we are making any difference in our bottom line.

Read the full story of my assets and liabilities journey here.

2. Use it to detect money leaks

Small leaks can eventually sink a ship. The same goes for our financial health. The most dangerous expenses are the little things we cannot see. A simple approach to personal finance similar to the table above can help us detect those leaks.

One of the latest leaks I found “harmless” were books and e-books. I generally deem them as an investment, so I buy every title that interests me. One day, as I was doing my accounting, I was surprised to learn I already owned 234 books — and most of them I haven’t read yet!

Just to be clear, there is nothing wrong with buying books per se. 234 titles are only a few for some. But the concern here is that I am only buying for the sake of buying — which is a dangerous habit. Because of that, I have decided not to buy any books until I’m done reading every title in my library. This was in 2019. Two years later, I have finished 107 out of 234 so far. Guess I won’t have any new books coming for the next couple more years.

Coins from our coin bank.

3. It is a reliable accountability partner

One of the most valuable uses of personal finance is being a dependable accountability partner. Your records will not tolerate poor financial decisions. As long as you are transparent with the numbers you encode on your spreadsheets (or apps), it will, in turn, give you honest feedback about your overall financial health. It will help you make logical, rather than emotional, decisions. Now, it is no longer a question of whether I want it or not, but rather, can I afford it or not?

It has been seven years since my wife and I last traveled overseas. So we decided to plan a trip to Tokyo Disneyland and Universal Studios in Osaka sometime in September 2023. We have already started a budget and created our itinerary. Beyond the Covid issue, our financial management and everyday living habits will ultimately determine whether our vacation will become a reality.

Read: How We Killed 8 Credit Cards

4. It helps you build credibility

Taking care of your finances goes a long way. It will not only help improve your economic condition, but it can also aid in building trust with other people. Nobody wants to do business with individuals who have financial red flags. The way a person handles his money speaks a lot about him. Most institutions will ask for your bank statements before they engage in partnership talks with you.

I remember when my wife and I were shopping for brand-new kitchen cabinets because the old ones had been infested with termites. The owner, who is our friend, asks us when we are planning to replace them. We answered about eight to twelve months from now.

“How come?” he followed up.

With transparency, we replied that our budget still does not allow it, so we are saving up. He returned to his office and came back with a proposal stating we could purchase the cabinets on a PAY WHEN ABLE basis. Lalaine and I both looked at each other in disbelief. We thanked him and asked, “Why such a generous offer?” He replied, “Because I know I won’t have any problems with you guys.”

Sure, he is a friend. But he is also a businessman at the end of the day. This offer is unlikely to be extended to every friend he has. While we were humbled by his remarks, we ended up proposing a new solution where we could meet halfway. In place of paying when we could, we issued post-dated checks with the amount we could afford each month. 

5. Use it to teach your kids about money

I work at home. Whenever I do my personal finance, my eldest son is often there to observe. He is curious and asks many money-related questions — which I am more than happy to answer.

  • Why are some numbers red and some are green?
  • What is money for?
  • How do people get money?
  • Do we have a lot of money?
  • Why do I need money to buy toys?
  • Are there people who do not have money?
  • Can we still eat without money?

As I answer each question, he begins to grasp the concept of money little by little.

My wife shared with me a story about her experience with the kids in a toy store one day. She said she was surprised when our son asked her this question: “Can we afford this toy mommy?” She was moved by his thought process, as she never expected a 4-year-old to be so considerate about our budget. Certainly a proud parent moment for us. 

Read: Can Parents Spend Their Children’s Money?

6. You can tell your story through it

Numbers tell stories. What narrative can you see based on these figures?

2017– Php 1,841,363.56
2018– Php 1,114,199.63
2019– Php 753,069.63
2020– Php 600,000.00
2021– Php 500,000.00
2022– Php 420,000.00

These numbers narrate my debt-free journey. I had already paid off half by liquidating some of my fixed assets before I kept track of my progress.

  • 2017 was the year when the grinding began. I started paying off my creditors from scratch.
  • 2018 was a good year. As a result of a real estate deal, I was able to cut off a substantial amount of my debt.
  • 2019 was not bad either. I started to get the hang of making money online.
  • 2020 was so-so. Seeing Covid had begun to hamper some of my income sources, I began to look for new opportunities.
  • 2021 was below average. Moving to a new house interfered with our usual debt payment budget.

At the moment, I still owe people Php 420,000 and I can’t wait till the day when I will be able to clear this debt.

If you are also in a similar situation, I hope you somehow find encouragement from this extra short story. And that is one of the most significant uses of personal finance. Your data will eventually tell compelling stories, the sort which others can learn from.

Closing thoughts

There are other ways to apply personal finance in your daily life, such as organizing bills, improving cash flow, planning for the future, and managing risks. Financial management is a necessary skill everyone should practice. This is essential to maintaining a healthy lifestyle.

See also

Jed Chan

Jed Chan is the principal creator of, a website dedicated to providing helpful resources on fatherhood. He is a passionate learner who would normally immerse himself in topics of his interest. Jed carefully studied the subjects of finance, e-business, and parenting before becoming a full-time stay-at-home dad.

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